E-commerce in the Southeast Asian nation of Indonesia appears on the verge of a real break-out. The web represented around 1% of total retail sales in 2015, but research firm eMarketer expects that will grow to 4.4% by 2019 as e-commerce spending shoots up from $3.2 billion last year to $10.9 billion. Driving the growth, analysts and retailers say, is a combination of factors, including faster Internet service, big increases in the number of smartphone users and improvements to delivery services.
Taking advantage of that e-commerce growth is an unlikely player—a company called Go-Jek, which launched in 2011 as a motorcycle taxi service similar to Uber in the U.S. Last year Go-Jek launched a mobile app that is changing how Indonesian consumers shop for goods and services.
“They’ve gone from being a very small company to doing more than 200,000 transactions per day,” says Andi Boediman, managing partner of Indonesian venture capital company Ideosource, which invests in local e-commerce companies, including consumer electronics retailer Bhinneka. “Because of Go-Jek, suddenly people are getting used to using their mobile device to shop.”
Go-Jek was founded to improve Indonesia’s very fragmented motorcycle taxi system, says company co-founder and brand director Michaelangelo Moran. With a population roughly the size of the United States jammed into a country of more than 17,000 islands with a total land mass equivalent to Alaska, Indonesia has long had a real traffic problem, especially in large cities like Jakarta.
To get around traffic jams quickly, consumers would hop onto an unlicensed “ojek,” or motorcycle taxi, negotiate pricing with a driver on the spot and borrow his often very sweaty helmet. Go-Jek brings order to this system by licensing and insuring drivers, providing a Go-Jek-branded helmet and hair cover, and allowing consumers to book a taxi online—similar to how they would schedule and pay for an Uber ride in the U.S. Go-Jek takes a 20% commission on all rides, Moran says.
Since launching a mobile app for Android and iOS devices about a year ago, the company has taken off. The app has been downloaded about 7.5 million times, and Go-Jek is rapidly expanding the services it offers consumers. It is delivering food orders by motorbike taxi, for example, and allowing consumers to book spa appointments, buy tickets to local events, or act as a courier for local businesses.
The numbers are pretty staggering: In roughly one year Go-Jek has gone from working with 500 drivers to more than 200,000 today, Moran says. In January 2015, the company employed about 100 people. Today it has more than 1,200 staffers. Moran would not disclose annual revenue, but says Go-Jek is almost at the point of “being Indonesia’s first unicorn.” Unicorn is a term popular among venture capitalists to define privately held, startup technology companies that reach a $1 billion valuation.
The real opportunity for Go-Jek is in e-commerce, Moran says. Go-Jek now offers a service called Go-Mart, which is similar to an online marketplace where consumers can shop on the Go-Jek app for goods from local merchants, and have them delivered by motorbike to their doorstep.
Go-Jek is selling about 20,000 SKUs for 45 local merchants, including Bhinneka, Moran says. Since many Indonesian retail players do not have sophisticated e-commerce technology that allows them to upload product images and information to Go-Jek’s mobile app, Go-Jek employees have been physically going to each merchant’s store, photographing available items and uploading pricing and product descriptions to the app.
Since launching the Go-Mart service on its app in October, sales are picking up at a rapid pace, and local merchants that participate are increasing sales four to five times, Moran says. The company is working to connect with additional merchants in the country.
Also, to further tap into a growing demand among consumers for purchasing goods online, Go-Jek is working to build out an API (application program interface) that will allow online retailers to more easily upload their product catalogs to the Go-Jek app. For online orders placed on the Go-Jek app, a Go-Jek driver would then pick up purchases, as long as they fit on a motorbike, at a local warehouse or wherever that merchant’s inventory resides, and deliver them to the consumer. Similar to other operators of online marketplaces, Go-Jek takes a cut of each sale, though Moran would not disclose how much it charges merchants.
Go-Jek is also building its own payment system similar to Apple Pay whereby a consumer’s credit card information would be stored on their mobile device. The shopper would be able to wave her mobile phone by a payment terminal to complete the purchase, with transaction data communicated via the wireless technology known as near field communication, or NFC.
Go-Jek has raised funds from venture capitalists to finance these initiatives. Go-Jek raised $6 million in seed funding in mid-2014, and another $15 million from Sequoia Capital in April 2015. Go-Jek has raised funds from other investors as well, but the details of those deals are confidential, Moran says.
He will say he’s staggered by the company’s growth. “If you would have asked me a year ago when we made the app where we’d be today, it’s already 30 times that prediction.”Favorite